STABLECOINS AND SYSTEMIC COMPLIANCE RISKS: A COMPARATIVE LEGAL ANALYSIS UNDER MICA, THE GENIUS ACT, AND EMERGING CENTRAL ASIAN FRAMEWORKS

Sardor Khushvaktov

doi:10.61796/ejcblt.v3i4.1772

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Sardor Khushvaktov
skhushvaktov@gmail.com
Research Fellow at Tashkent State University of Law, Uzbekistan

Vol. 3 No. 4 (2026): Journal of Contemporary Business Law & Technology: Cyber Law, Blockchain, and Legal Innovations

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April 22, 2026

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Objective: This article examines the systemic compliance risks posed by stablecoins through a comparative legal analysis of three regulatory paradigms: the European Union’s Markets in Crypto-Assets Regulation (MiCA, Regulation (EU) 2023/1114), the United States’ Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act, enacted July 2025), and the nascent frameworks of Central Asian jurisdictions, principally Uzbekistan and Kazakhstan. Method: The analysis draws on FATF guidance, Financial Stability Board recommendations, IMF analysis, and primary legislative sources to examine stablecoin compliance risks within these regulatory frameworks. Results: The article argues that while MiCA and the GENIUS Act represent meaningful regulatory advances, persistent gaps in Travel Rule enforcement, reserve transparency, sanctions compliance, and cross-border supervisory cooperation create systemic vulnerabilities, particularly in emerging markets. Novelty: This article offers a comparative legal perspective on stablecoin regulatory challenges, focusing on the convergence of financial regulation, anti-money laundering law, and digital asset policy across major jurisdictions, with particular emphasis on emerging markets like Uzbekistan and Kazakhstan.

Khushvaktov, S. (2026). STABLECOINS AND SYSTEMIC COMPLIANCE RISKS: A COMPARATIVE LEGAL ANALYSIS UNDER MICA, THE GENIUS ACT, AND EMERGING CENTRAL ASIAN FRAMEWORKS. Journal of Contemporary Business Law & Technology: Cyber Law, Blockchain, and Legal Innovations, 3(4), 21–32. https://doi.org/10.61796/ejcblt.v3i4.1772

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. Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets (MiCA), OJ L 150/40 (9 June 2023). Titles III and IV entered into application on 30 June 2024; full application from 30 December 2024.

. Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), Pub. L. No. 119-____, 139 Stat. ____ (signed July 18, 2025). S. 1582, 119th Cong. (2025).

. Financial Action Task Force, Targeted Report on Stablecoins and Unhosted Wallets (FATF, Paris, 3 March 2026), at 1 (noting stablecoin market capitalisation exceeding USD 300 billion by mid-2025 and stablecoins accounting for 84% of illicit virtual asset transaction volume in 2025).

. Financial Action Task Force, Sixth Targeted Update on Implementation of the FATF Standards on Virtual Assets and VASPs (FATF, Paris, 26 June 2025). See also FATF, Fifth Targeted Update (FATF, June 2024) (finding 75% of assessed jurisdictions only partially or non-compliant with Recommendation 15).

. Chainalysis Inc., 2025 Crypto Crime Report (Chainalysis, 2025) (reporting stablecoin on-chain transaction volume exceeding $30 trillion in the twelve months to May 2025; 1.5 million daily stablecoin transfers globally as of 2023 data).

. MiCA, Arts. 3(1)(6), 48–58 (defining and regulating asset-referenced tokens); Arts. 3(1)(7), 59–61 (electronic money tokens). See Norton Rose Fulbright, “Regulating crypto-assets in Europe: Practical guide to MiCA” (2024).

. MiCA, Art. 21 (authorization requirements for ART issuers); Art. 35 (own funds: minimum of €350,000 or 2% of average reserve assets). For the EMT regime, see Arts. 48–58 (requiring credit institution or EMI authorization and white paper approval).

. Circle Internet Financial, Press Release, “Circle Becomes First Global Stablecoin Issuer to Comply with MiCA,” 1 July 2024 (obtaining EMI authorization from the Autorité de Contrôle Prudentiel et de Résolution (ACPR), France). USDC and EURC became the first MiCA-compliant stablecoins in the EU.

. European Securities and Markets Authority (ESMA), Statement on MiCA Transitional Measures (ESMA, 17 December 2024) (noting transitional periods ranging from 1 July 2025 (Netherlands) to 1 July 2026; CASPs operating under national transitional regimes lack EU passporting rights).

. Regulation (EU) 2023/1113 (Transfer of Funds Regulation, TFR), applicable from 30 December 2024. The TFR extends the travel rule to all crypto-asset transfers, requiring CASPs to collect and transmit originator and beneficiary data. See Hogan Lovells, “The EU’s MiCA Regulation: A Status Update” (2025).

. GENIUS Act, § 4(a)(5) (subjecting permitted payment stablecoin issuers (PPSIs) to Bank Secrecy Act obligations); § 4(a)(6)(B) (requiring technical capability to block, freeze, burn, or reject stablecoin transfers). See Latham & Watkins, “The GENIUS Act of 2025: Stablecoin Legislation Adopted in the US” (July 2025).

. Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), Joint Notice of Proposed Rulemaking, “Permitted Payment Stablecoin Issuer Anti-Money Laundering/Countering the Financing of Terrorism Program and Sanctions Compliance Program Requirements,” 91 Fed. Reg. ____ (proposed April 10, 2026). See 88 Fed. Reg. ____ (ANPRM, September 2025) (summarizing approximately 450 comments from stakeholders).

. GENIUS Act, § 3 (reserve requirements: issuers must hold minimum 1:1 reserves in coins, currency, insured deposits, short-dated Treasuries, repos backed by Treasuries, government money market funds, or central bank reserves). See Skadden Arps, “US Establishes First Federal Regulatory Framework for Stablecoins” (July 2025).

. GENIUS Act, § 6 (state regulatory option for nonbank issuers with <$10 billion outstanding stablecoins; Stablecoin Certification Review Committee (Treasury Secretary + Federal Reserve + FDIC) evaluates “substantially similar” state regimes); § 7 (issuers exceeding $10 billion threshold must transition to federal oversight within 360 days).

. GENIUS Act, § 4(a)(5)(A)(iii)–(iv); FinCEN NPRM (2026) at §§ III.B–C (AML/CFT program elements: customer identification, suspicious activity reporting, risk-based due diligence, designated compliance officer a U.S. resident without disqualifying financial crime convictions).

. Decree of the President of the Republic of Uzbekistan, “On Measures to Further Develop the Financial Technology Sector in Uzbekistan,” No. UP-____ (28 November 2025) (greenlighting a regulatory sandbox for stablecoin payments from 1 January 2026; five-year fintech blueprint 2026–2030).

. Law of the Republic of Uzbekistan No. 660-II, “On Combating the Legalization of Criminal Proceeds, Terrorist Financing, and Financing of the Proliferation of Weapons of Mass Destruction” (as amended). See also Central Bank of the Republic of Uzbekistan, Risk-Based Supervision Guidelines (December 2023).

. National Agency for Prospective Projects (NAPP), Uzbekistan, regulatory announcements 2024 (doubling monthly exchange fees to approximately $20,015 in late 2024; licensed domestic providers processing over $1 billion in transactions in 2024). See The Paypers, “Uzbekistan Plans 2026 Stablecoin and Tokenised Asset Rules” (December 2025).

. Republic of Kazakhstan, Law on Digital Assets No. 191-IV of 28 August 2009 on Counteracting Legalisation of Proceeds of Crime (as amended 2023). See also Astana International Financial Centre, Amendments No. 7 to AIFC Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Rules (effective 1 January 2025).

. Kirill Greshnikov, “New in the Regulation of Digital Assets in Kazakhstan,” Chambers and Partners (4 July 2025) (describing AIFC licensing framework, Financial Intelligence Unit suspicious transaction reporting requirements, and national crypto reserve proposal).

. Financial Action Task Force, Targeted Report on Stablecoins and Unhosted Wallets (FATF, 3 March 2026) (DPRK actors and terrorist financiers increasingly exploit stablecoin P2P transactions via unhosted wallets; the $1.46 billion Bybit hack attributed to DPRK in 2025 with only 3.8% of stolen assets recovered).

. Financial Stability Board (FSB), “High-Level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements” (FSB, July 2023) (noting that blanket bans on virtual assets risk regulatory arbitrage and spillover to permissive jurisdictions; recommending activity-based, technology-neutral regulatory approach).

. International Monetary Fund, “Global Financial Stability Report” (IMF, April 2024) (flagging systemic risks from interconnected stablecoin markets, particularly following the Terra/Luna collapse of May 2022; recommending reserve transparency, redemption rights, and systemic risk designation for significant issuers).

. MiCA, Art. 43 (EBA classification of asset-referenced tokens as “significant” based on: number of holders exceeding 10 million, market cap/reserve exceeding €5 billion, number/value of transactions, size of reserve, interconnectedness with financial system; significant ARTs subject to enhanced EBA supervision); see Art. 44 (bespoke requirements for significant tokens).

. FATF, Targeted Report on Stablecoins and Unhosted Wallets (2026), at pp. 12–15 (recommending jurisdictions: (i) apply AML/CFT obligations to stablecoin issuers as VASPs; (ii) implement the travel rule for P2P stablecoin transfers; (iii) require issuers to maintain blacklisting/freezing capabilities; (iv) enhance cross-border supervisory cooperation).